Heat wave pushes up electricity prices in spot market

Power prices in the spot market shot up by nearly 7% in two days to more than Rs 3 per unit on Wednesday due to the ongoing heat wave conditions in most parts of the country.

The prices had been hovering around Rs 2.50 per unit for the past few months. Industry experts said power prices are likely to reduce in the next few days as idle power plants begin production on high demand.

However, an increase in electricity demand on the early onset of summer is likely to bring relief to the under-utilised and idle power plants.

Data available with the Central Electricity Authority shows that more than 50,000 MW of installed power capacity is under outage while thermal power plants are operating at 60% of their capacity. On Tuesday, the demand for electricity rose to 140 GW from about 130 GW in the previous days, Vidyut Pravah, portal of the power ministry showed.

On Tuesday, the average price on the exchange crossed Rs 2.90 per unit. On Wednesday, it touched Rs 3.20 per unit. On both days, the bids inviting power supply exceeded the bids offering electricity, a reversal of the usual scenario of excess availability of power on the exchange. The average market clearing price in February was Rs 2.54 per unit, about the same as the price of Rs 2.50 per unit in January.

Power minister Piyush Goyal on Wednesday said electricity demand in the country saw 6.6% compound annual growth rate in the past two years and nine months of NDA regime, more than the 6.3% during 2004-2015.

He said the growth in electricity demand was despite the energy efficiency measures undertaken by the central government. Kerala, Arunachal Pradesh and Tripura joined the central government’s discom revival scheme Ujwal Discom Assurance Yojana (Uday). The states are expected to derive total net benefits of `5,300 crore by joining the scheme.

So far, 26 states and one union territory representing 97% of discom debt have joined the scheme. Rural Electrification Corporation’s executive director Ritu Maheshwari said the states have derived Rs 11,900 crore benefit in the nine months after joining Uday.

She said the revenue gap of the discoms in 16 early states has fallen 49 paise from 61 paise and the power technical losses have reduced to 22.5% from 24%.

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